Bank current accounts

Shopping guide to Banking Current Accounts, from Ethical Consumer

This is a product guide from Ethical Consumer, the UK's leading alternative consumer organisation. Since 1989 we've been researching and recording the social and environmental records of companies, and making the results available to you in a simple format.

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Our ratings are live updated scores from our primary research database. They are based on primary and secondary research across 23 categories - 17 negative categories and 6 positive ones (Company Ethos and Product Sustainability). Find out more about our ethical ratings.

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The score table shows simple numerical ratings out of 20 for each product. The higher the score, the more ethical the company.

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Best Buys

as of March 2014

As our ratings are constantly updated, it is possible that company ratings on the score table may have changed since this report was written.

The Cumberland and Coventry building societies come out on top.

Whilst they retain their Ethical Policy, we still believe that the Co-op and Smile are good choices too.

25 Credit Unions across the UK now offer basic current accounts (through the Co-operative).

Bank on something better

In April 2012, the Ethical Consumer research team explains why and how consumers can switch to a more ethical banker.

What’s the problem?

Monthly bank statements are somewhat misleading things. They give the impression that your money just sits there in a lump, and that the bank provides a virtual equivalent of a mattress in times of old. But money in the hands of an international financial institution very rarely sits still, and figuring out where your money might end up can be tricky.
In other sections of this report we detail how banks have been criticised for a litany of abuses including: speculating on food prices, avoiding tax through the use of tax havens, investing in oil, nuclear and other polluting industries, paying absurdly large sums to directors, and financing the arms trade.

If this isn’t enough to put you off, we have also looked at the companies which banks provide services for. For example, Barclays is banker to arms manufacturer BAE Systems, NatWest is BP’s banker, whilst HSBC is banker for mining company Rio Tinto.

The score table has condensed all the information we hold about these and many other controversial areas of operation for banks. We include marks in all the columns where banks have provided finance for problem areas. For example, Citibank is listed as a banker for British American Tobacco, so it receives a half mark in the Irresponsible Marketing column on the table. Just click on the names on the score table – or in the PDF of this report.

Where best engagement practice is evidenced and the institution is only a shareholder, the group will not receive a negative mark for controversial shareholdings.

For readers with a strong disposition there is also an excellent interactive website at www.banksecrets.eu with a world map detailing harmful investments of each of the major banks around the world.

What’s the solution?

As the ranking table and best buy advice show, there are now a wide range of alternatives to banking with one of the big five. Building Societies and Credit Unions score well. They are effectively restricted by law from the kind of controversial investments detailed above, and are discussed extensively in the article ‘Flight to mutuals’. The fact that you are an owner as well as a customer, and that mutuals exist for the benefit of their members rather than to maximise profit, is also an attractive feature.

What about the Co-op Bank?

Metro Bank

A new entrant into the banking market in 2010 was Metro Bank with a few branches in London. Although it doesn’t appear to have any particular ethical policies, its current position as a consumer-only bank means that it hasn’t attracted criticisms for problem investments like some of the other banks, and so scores quite well.

How to switch banks

The fact that the big five banks hold 85% of all current accounts is perhaps testimony to the ‘high degree of customer inertia’ in this sector. Switching current accounts can be more complicated than just opening a new savings account, but banks often have ‘switching advice teams’ now, and Which? has a useful online guide to switching.

And the good news is, unlike some markets where the ethical choices can be more expensive or less high quality, the most ethical banks are highly rated in Which?’s ‘Recommended Provider’ list. For banks the list includes: First Direct, Smile, The One Account, Co-operative Bank and Nationwide BS.

Comments (3)

I don't understand how the Co-Op is among the "best buys" (and widely regarded as an ethical bank) but it is lower in the ratings table than banks such as Santander, Citibank and many others..and is rated the same as HSBC. Please help, as I am looking to switch to an ethical bank and am a bit lost. Thanks!

At 12:56PM on 06 Feb 2012, Jane Turner wrote:

Please see our new February 2012 ratings and the explanation of why Co-op is a Best Buy in the text.

At 04:06PM on 07 Aug 2012, Rob Harrison wrote:

If the supermarket aspect of the Co-op's score were removed the Co-op Bank would score 13/20. Move your money has already asked this question and the answer appears on its site too: http://www.moveyourmoney.org.uk/where-can-i-move-my-money-toJust edges it over Nationwide then.

First Direct describes itself as "A Division of HSBC". It will have some operational independence then, but in terms of its main impacts - the rules it applies to what it chooses to invest in or hold asstes in - they are, so far as we can tell, the same as HSBC...hence the identical rating. rel='nofollow'

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